WILMINGTON, Del. (Legal Newsline) - Companies facing asbestos lawsuits are off to court to prevent the destruction of evidence they say is needed to defend themselves.
One of them - Johnson & Johnson - is preparing a return to civil courts to fight what it calls meritless claims its Baby Powder used asbestos-containing talc, after a bankruptcy judge in Houston refused to let it settle tens of thousands of claims for $9 billion.
On April 14, J&J, DBMP and Pecos River Talc have filed suit in the Delaware Court of Chancery against 10 trusts that were established in bankruptcy court to pay asbestos victims. Those trusts in January announced they would be deleting resolved or withdrawn claims, but companies facing lawsuits say they need it.
In asbestos cases, exposure evidence is key. Should someone sue J&J or others, those defendants want to be able to show whether the plaintiff also blamed other products in claims with bankruptcy trusts.
It's called "double-dipping," and in 2014 evidence of plaintiff lawyers manipulating the system by blaming different companies at different times for the same injuries was uncovered during the bankruptcy of Garlock Sealing Technologies.
"(T)he Document Destruction Policies were specifically designed to evade the obligation to produce highly relevant information in current and future legal proceedings, to avoid court findings similar to those made in (Garlock) and to otherwise compromise the ability of asbestos defendants to defend current and future asbestos-related claims," lawyers representing the companies wrote April 14.
Dozens of companies that faced overwhelming liability for asbestos have formed trusts in bankruptcy court to pay asbestos victims rather than going through costly litigation. And there are still companies doing the same, like a spinoff company of Georgia-Pacific's called Bestwall.
Judges make the ultimate determination on how much money needs to be placed in trusts, and the companies going through the process often argue figures recommended by plaintiff lawyers are excessive because they rely on a history of double-dipping.
Before Garlock Sealing Technologies convinced a judge in 2014 this was happening, companies facing lawsuits had no way to prove the same clients were telling different exposure histories in claims made to bankruptcy trusts and in lawsuits filed in various courts.
After the Garlock ruling, which came after the company showed exposure history contradictions in the 15 cases it was permitted to investigate, 16 states passed laws requiring automatic disclosure of trust claims to civil defendants so they could find out who was being blamed for what.
The possible violation of these laws piqued the curiosity of 15 state attorneys general who issued a letter to the trusts and the Delaware Claims Processing Facility ahead of the April 15 destruction start date.
"Your planned document destruction may very well impede the efficacy of these laws, which are intended to ensure fairness to claimants, defendants and trust funds themselves. Further, your planned document destruction may impede the ability of individuals to fairly adjudicate claims in our state courts," the letter says.
"As you well know, the data and documents retained by the trusts are often essential to validating (or invalidating) claims in separate litigation."
South Carolina Attorney General Alan Wilson led his colleagues in the letter. His office said April 15 that it had not received a response.
The complaint filed by J&J and others also asks for an injunction preventing any spoliation of evidence and for the proceedings to be expedited.
"(T)hese fundamental rights - Plaintiffs' rights to the very trust discovery at issue here - have been expressly recognized in innumerable discovery orders in the asbestos tort system and by at least 16 state legislatures through trust transparency laws," the complaint says.
"These rights would be rendered meaningless if the defendants could unilaterally destroy this evidence by implementing document destruction policies."
The trusts planning destruction are Armstrong World Industries, Babcock & Wilcox, Celotex, Federal-Mogul, Flinkote, Owens Corning, Pittsburgh Corning, Quigley, United States Gypsum and WRG.
Joining Wilson's letter on behalf of AGs are Steve Marshall of Alabama, Austin Knudsen of Montana, Chris Carr of Georgia, Dave Yost of Ohio, Brenna Bird of Iowa, Marty Jackley of South Dakota, Liz Murrill of Louisiana, Jonathan Skrmetti of Tennessee, Lynn Fitch of Mississippi, Ken Paxton of Texas, Andrew Bailey of Missouri, Derek Brown of Utah, Jason Miyares of Virginia and John McCuskey of West Virginia.